Beijing’s decision to widen the yuan’s trading band against the US dollar means investors can play a bigger role in determining the value of the currency, People’s Bank of China Deputy Governor Yi Gang (易綱) said.
“It’s time to let the market more or less decide the exchange rate while reducing the intervention on the market,” Yi said on Saturday at an event in Washington, where he is attending the spring meetings of the IMF and World Bank.
He said market forces have already played an “important role” in determining the currency’s value, which has been a “persistent two-way bet” for some time.
China this month doubled the yuan’s trading band to 1 percent from 0.5 percent, the first widening since 2007.
The yuan has weakened 0.2 percent against the US dollar this year after rising 31 percent since July 2005, when the government abandoned a peg to the US currency.
Chinese Premier Wen Jiabao (溫家寶) said on March 14 the yuan may be near an “equilibrium” as export growth slows and the government promotes policies to boost imports and consumption.
The nation in February posted the biggest monthly trade deficit since at least 1989.
The 12-month non-deliverable forwards showed traders are betting the yuan to be little changed from 6.3086 per dollar on April 20, data showed.
China’s surplus in the current account, the broadest measure of trade and services, has dropped to 2.8 percent of GDP last year from 10.1 percent in 2007, a reversal that was “sharper and more persistent than expected,” IMF staff wrote in a working paper this month.
Two-thirds of the decline in the surplus was “structural” as rising labor costs and a stronger currency erode exports’ competitiveness, according to Yi. The rest of the decline was due to the “cyclical” drop in demand from Europe and the US, he said.
A more balanced trade portfolio reduces the need for the central bank to intervene in the currency market to offset dollar inflows, according to Yi, who is also head of China’s State Administration of Foreign Exchange.
China has amassed US$3.3 trillion in foreign reserves, which is the world’s largest and equivalent to the size of the German economy.
“It doesn’t make sense to continue to accumulate reserves as imports surge,” Yi said.
China’s imports may double to US$4 trillion by 2020 from an estimated US$2 trillion by the end of the year, he said.
Yi said China is a “long-term, responsible investor” in the US Treasury market. China is the largest creditor to the US, holding US$1.2 trillion in Treasuries as of February.
Since the US is the largest fixed income market, “it’s very natural to invest quite a large proportion” of China’s reserves in Treasuries, he said.
“That’s completely a market decision,” he said.
At the same meetings, central bank Governor Zhou Xiaochuan (周小川) said China supports boosting the IMF’s lending resources even as it pushes the Washington-based lender to continue implementing a promised overhaul of the quota system that determines members’ power and voting rights.
Zhou said China’s growth outlook “remains positive” after the world’s second-biggest economy expanded 8.1 percent in the first quarter.
While “near-term” inflation pressures have “moderated,” policy makers remain “vigilant” amid “ample global liquidity,” he added.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained